AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
dated as of June 13, 1997
between
NationsBank, N.A.,
as Lender
and
Emergent Commercial Mortgage, Inc.,
as Borrower
$5,000,000
TABLE OF CONTENTS
SECTION PAGE
1. DEFINITIONS AND ACCOUNTING TERMS...............................................................................1
1.1 DEFINITIONS.........................................................................................1
1.2 ACCOUNTING TERMS.....................................................................................6
1.3 USE OF DEFINED TERMS.................................................................................6
1.4 SECTION AND EXHIBIT REFERENCES, ETC..................................................................6
2. AMOUNT AND TERMS OF THE LOANS..................................................................................6
2.1 THE LOANS............................................................................................6
2.2 INTEREST AND OTHER CHARGES...........................................................................7
2.3 COMPUTATION OF INTEREST AND OTHER CHARGES............................................................8
2.4 CHARGES..............................................................................................8
2.5 PAYMENT..............................................................................................8
2.6 PAYMENT ON NON-BANKING DAYS..........................................................................9
2.7 EFFECTIVE DATE AND TERMINATION.......................................................................9
2.8 STATEMENTS OF ACCOUNT................................................................................9
3. SECURITY INTERESTS.............................................................................................9
4. CONDITIONS PRECEDENT TO ADVANCES..............................................................................10
4.1 DOCUMENTS...........................................................................................10
4.2 OTHER CONDITIONS PRECEDENT..........................................................................10
5. CLOSING PROCEDURES............................................................................................11
5.1 TRANSFERS OF LOAN DOCUMENTS.........................................................................11
5.2 RELEASE OF SECURITY INTEREST IN COLLATERAL..........................................................11
6. GENERAL REPRESENTATIONS AND WARRANTIES........................................................................11
6.1 ORGANIZATION, STANDING, ETC.........................................................................11
6.2 ENFORCEABILITY......................................................................................12
6.3 QUALIFICATION.......................................................................................12
6.4 COMPLIANCE WITH ARTICLES OF INCORPORATION, BY-LAWS, AND OTHER INSTRUMENTS, ETC......................12
6.5 SUBSIDIARIES; PARENT................................................................................12
6.6 FINANCIAL STATEMENTS................................................................................12
6.7 CHANGES IN FINANCIAL CONDITION......................................................................13
6.8 TAX RETURNS AND PAYMENTS............................................................................13
6.9 TITLE TO PROPERTIES AND ASSETS; LIENS; ETC..........................................................13
6.10 PATENTS; TRADEMARKS; FRANCHISES; ETC...............................................................13
6.11 LITIGATION, ETC....................................................................................14
-i-
6.12 ADVERSE DEVELOPMENTS...............................................................................14
6.13 DISCLOSURE.........................................................................................14
6.14 MARGIN SECURITIES..................................................................................14
6.15 INVESTMENT COMPANY.................................................................................14
6.16 ERISA..............................................................................................14
6.17 LOCATIONS..........................................................................................15
6.18 SOLVENCY...........................................................................................15
6.19 NAME CHANGE; MERGER................................................................................15
7. AFFIRMATIVE COVENANTS.........................................................................................15
7.1 INSURANCE...........................................................................................15
7.2 TAXES AND LIABILITIES...............................................................................15
7.3 ACCOUNTING; FINANCIAL STATEMENTS; ETC...............................................................16
7.4 INSPECTION..........................................................................................17
7.5 MAINTENANCE OF CORPORATE EXISTENCE; COMPLIANCE WITH LAWS............................................17
7.6 USE OF PROCEEDS.....................................................................................17
7.7 NOTICE OF DEFAULT...................................................................................17
7.8 MAINTENANCE OF PROPERTIES...........................................................................17
7.9 NOTICE OF ERISA DEVELOPMENTS........................................................................17
7.10 NOTICE OF LITIGATION OR ADVERSE CHANGE.............................................................18
7.11 PAYMENT OF LOANS...................................................................................18
7.12 NOTIFICATION OF CHANGE OF NAME OR BUSINESS LOCATION................................................18
7.13 TANGIBLE NET WORTH.................................................................................18
7.14 RATIO OF TOTAL LIABILITIES TO TANGIBLE NET WORTH...................................................18
7.15 INTEREST COVERAGE RATIO............................................................................18
7.16 EGI SUBSIDIARY.....................................................................................18
7.17 COLLATERAL REPORTING...............................................................................18
8. NEGATIVE COVENANTS............................................................................................19
8.1 DEBT 19
8.2 LIENS...............................................................................................19
8.3 GUARANTEES..........................................................................................19
8.4 PLAN LIABILITIES....................................................................................19
8.5 FISCAL YEAR.........................................................................................19
8.6 OTHER TRANSACTIONS..................................................................................19
8.7 MERGER; SUBSIDIARY; ETC.............................................................................20
8.8 SALE OF ASSETS......................................................................................20
8.9 CHANGES IN BUSINESS.................................................................................20
8.10 DIVIDENDS AND REDEMPTIONS..........................................................................20
8.11 LOANS..............................................................................................20
8.12 PLEDGE OF CREDIT...................................................................................20
8.13 INVESTMENTS........................................................................................20
8.14 CAPITAL EXPENDITURES...............................................................................20
9. POWER OF ATTORNEY.............................................................................................21
- ii -
10. REMEDIES.....................................................................................................21
11. MISCELLANEOUS................................................................................................22
11.1 NO WAIVER; CUMULATIVE REMEDIES.....................................................................22
11.2 AMENDMENTS, ETC....................................................................................22
11.3 ADDRESSES FOR NOTICES, ETC.........................................................................22
11.4 COSTS, EXPENSES, AND TAXES.........................................................................23
11.5 COMMERCIAL TRANSACTION.............................................................................23
11.6 SUCCESSORS AND ASSIGNS.............................................................................24
11.7 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.........................................................24
11.8 TIME IS OF THE ESSENCE.............................................................................24
11.9 HEADINGS...........................................................................................24
11.10 ENTIRE AGREEMENT..................................................................................24
11.11 SEVERABILITY......................................................................................24
11.12 COUNTERPARTS......................................................................................24
11.13 GOVERNING LAW; CONSENT TO JURISDICTION............................................................24
11.14 WAIVER OF TRIAL BY JURY...........................................................................25
- iii -
Exhibits:
Exhibit A - - Form of Borrower's Secretary's Certificate (Section 1.1)
Exhibit B - - Form of Borrower's CEO's Certificate (Section 1.1)
Exhibit C - - Form of Opinion (Section 1.1)
Exhibit D - - Form of Escrow Agreement (Section 1.1)
Schedules:
Schedule 1 - - Liens (Section 8.2)
Schedule 2 - - Trademarks, Trade Names, Name Changes, etc.
(Sections 6.10 and 6.19)
Schedule 3 - - Litigation (Section 6.11)
- iv -
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
This Agreement is made as of the 13th day of June, 1997,
between NationsBank, N.A., as successor to NationsBank, N.A. (South) (the
"LENDER"), and Emergent Commercial Mortgage, Inc. (the "BORROWER"), a South
Carolina corporation.
RECITALS:
The Borrower and the Lender entered into that certain Loan and Security
Agreement dated as of October 10, 1995 (as amended, the "ECM Loan Agreement"),
pursuant to which the Lender agreed to finance the Borrower's portfolio of SBA
"504 Program" loans.
The Borrower and the Lender desire to amend and restate the ECM Loan
Agreement to make certain changes, all as more particularly described herein.
The Borrower and the Lender therefore agree as follows:
1. DEFINITIONS AND ACCOUNTING TERMS
1.1 DEFINITIONS. The following terms, when capitalized
as in this Section 1.1, shall have the following meanings:
"ADVANCE": the proceeds of a Loan.
"AFFILIATE" of any designated Person: another Person controlling,
controlled by, or under common control with such designated Person (but not
including the Lender), and shall include (x) the spouse, parents, brothers,
sisters, children, and grandchildren of such designated Person, (y) any
association, partnership, trust, entity, or enterprise in which such designated
Person is a director, officer, or general partner or in which such designated
Person together with Affiliates of such designated Person own in the aggregate
at least a 10% beneficial interest in assets, profits, or losses, and (z) any
Subsidiary of such designated Person.
"BANKING DAY": a day for dealings by and between banks, excluding
Saturday, Sunday, any legal holiday in Atlanta, Georgia, and any other day on
which banking institutions in Atlanta, Georgia are generally closed.
"BORROWER'S CEO'S CERTIFICATE": the Certificate of the Borrower's Chief
Executive Officer, substantially in the form of Exhibit B.
"BORROWER'S SECRETARY'S CERTIFICATE": the Certificate of the Borrower's
Secretary, substantially in the form of Exhibit A.
"BORROWING BASE": defined in Section 2.1(a).
"BORROWING GROUP": EBC, EFC, and the Borrower.
"CAPITAL EXPENDITURES": the dollar amount of gross expenditures
(including obligations under leases which are required under GAAP to be
capitalized for financial reporting purposes) made or incurred for fixed assets,
real property, and plant and equipment which are required to be capitalized for
financial reporting purposes in accordance with GAAP.
"CODE": the Internal Revenue Code of 1986, as amended.
"COLLATERAL": all property described in Section 3 hereof, and all the
Borrower's other property in which the Lender at any time has a security
interest or which at any time are in the Lender's possession or control.
"DEFAULT": (x) an event, act, or condition that would be an Event of
Default but for the requirement(s) that notice be given or time elapse, or (y)
an Event of Default.
"EBC": Emergent Business Capital, Inc.
"EBC L&SA": the Amended and Restated Loan and Security Agreement, to be
entered into after the date hereof, between NationsBank, N.A. and Hibernia, as
lenders, NationsBank, N.A., as agent for the lenders, and EBC, in form and
substance satisfactory to the Lender.
"EBIT": the total earnings of the Borrowing Group and their
consolidated Subsidiaries from all sources, excluding extraordinary items,
before deducting interest or income tax expense, but after deducting
depreciation and amortization expense.
"EFC": Emergent Financial Corporation.
"EFC L&SA": the Amended and Restated Loan and Security Agreement, dated
of even date herewith, between NationsBank, N.A. and Hibernia, as lenders,
NationsBank, N.A., as agent for the lenders, and EFC.
"EGI": Emergent Group, Inc.
"ELIGIBLE LOAN: a commercial loan for which the Borrower holds a first
mortgage lien on the property being financed and which (1) is held by the
Borrower and funded in accordance with an issued SBA Commitment, (2) remains at
all times eligible for SBA funding under that SBA Commitment, including
compliance with all budgetary and other conditions, and (3) meets all the
-2-
Lender's other funding requirements which may be imposed with respect to the
loan involved (which may include a takeout purchase commitment from a reliable
"504 Program" lender).
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended.
"EVENT OF DEFAULT": any of the following: (1) non-payment, within seven
days after the due date, of any amount payable on any of the Obligations; (2)
failure to perform any material agreement or meet any obligation of the Borrower
or any of its Affiliates contained herein; (3) nonpayment when due of any
premium on any insurance policy required to be maintained under Section 7.1
hereof; (4) the existence of a default under any other agreement between the
Borrower, EBC or ECM and the Lender or any Affiliate of the Lender's; (5) any
statement, representation, or warranty of the Borrower made in writing herein or
in any other writing at any time furnished or made by the Borrower to the Lender
is untrue in any material respect as of the date furnished or made; (6)
suspension of the operation of the Borrower's present business; (7) any Obligor
becomes insolvent or unable to pay debts as they mature, admits in writing that
it is so, makes a conveyance fraudulent as to creditors under any state or
federal law, or makes an assignment for the benefit of creditors, or a
proceeding is instituted by or against any Obligor alleging that such Obligor is
insolvent or unable to pay debts as they mature, or a petition under any
provision of Title 11 of the United States Code (entitled "Bankruptcy"), as
amended, is brought by or against any Obligor; (8) entry of any judgment for
more than $50,000 against any Obligor; (9) creation, assertion, or filing of any
Lien (other than a Permitted Lien) against any of the property of any Obligor;
(10) dissolution, merger, or consolidation of any Obligor (other than a merger
or consolidation of the Borrower or the Guarantor with or into the Borrower or
the Guarantor); (11) termination or withdrawal of any guarantee for any of the
Obligations, or the failure for any other reason of any such guarantee or
agreement to be enforceable by the Lender in accordance with its terms; (12)
transfer of a substantial part of the property of any Obligor; (13) sale,
transfer, or exchange, either directly or indirectly, of a controlling stock
interest of the Borrower or the Guarantor; (14) appointment of a receiver for
the Collateral or for any property in which the Borrower has an interest; (15)
seizure of the Collateral by any third party; (16) at least 10% (face value) of
the Borrower's loan portfolio are at least 90 days past due, and have remained
at least 90 days past due for at least 30 days; (17) the Lender in good faith
believes that the prospect of payment or performance of the Obligations has been
impaired; or (18) the EBC L&SA shall not be effective, and/or all of the
conditions precedent to the closing of the EBC L&SA shall not be satisfied or
waived by the Lender, on or prior to June 30, 1997.
"GAAP": generally accepted accounting principles applied in a manner
consistent with the financial statements described in Section 6.6.
"GUARANTEE": the document by that name, dated the date of this
Agreement, of the Guarantor, in favor of the Lender.
"GUARANTOR": EGI.
-3-
"HEREIN", "HEREOF", "HEREUNDER", etc.: in, of, under, etc. this
Agreement (and not merely in, of, under, etc. the section or provision where
that reference appears).
"HIBERNIA": Hibernia National Bank, and its successors and assigns.
"INCLUDING": containing, embracing, or involving the enumerated
item(s), but not necessarily limited to such item(s).
"INSURANCE": the policy or policies of insurance described in Section
7.1, including all required endorsements thereto.
"INTEREST ON SENIOR FUNDED DEBT": the interest on the Obligations and
all "Obligations" under the EBC L&SA and EFC L&SA during the period for which
computation is being made.
"LIEN": any mortgage, pledge, deed of trust, assignment, security
interest, encumbrance, hypothecation, lien, or charge of any kind, including any
conditional sale or other title retention agreement, any lease having
substantially the same economic effect as any of the foregoing, and the filing
of, or agreement to give, any financing statement under the Uniform Commercial
Code or comparable law of any jurisdiction.
"LOANS": the loan(s) under Section 2.1(a) in the principal amount of up
to $5,000,000, plus any Overadvances, made by the Lender to the Borrower under
this Agreement.
"OBLIGATIONS": all present and future (a) duties, obligations, and
liabilities of the Borrower to the Lender under this Agreement, or under any
document or agreement executed and delivered pursuant to or in connection with
this Agreement, (b) sums owing to the Lender for goods or services purchased by
the Borrower from any other firm financed by the Lender, (c) obligations under
all notes and contracts of suretyship, guarantee, or accommodation made by the
Borrower in favor of the Lender, and (d) all other obligations of the Borrower
to the Lender, however and whenever created, arising, or evidenced, whether
direct or indirect, through assignment from third parties, absolute, contingent,
or otherwise, primary or secondary, now or hereafter existing, or due or to
become due.
"OBLIGOR": the Borrower, any guarantor, or any other party at any time
primarily or secondarily, directly or indirectly liable on any of the
Obligations.
"OPINION": the legal opinion, of counsel to the Borrower satisfactory
to the Lender, substantially in the form of Exhibit C.
"OR": at least one, but not necessarily only one, of the alternatives
enumerated.
"OVERADVANCES": loans by the Lender to the Borrower in excess of those
described in Section 2.1(a).
-4-
"PERMITTED LIEN": a Lien permitted by Section 8.2.
"PERSON": any individual, joint venture, partnership, firm,
corporation, trust, unincorporated organization, or other organization or
entity, or a governmental body or any department or agency thereof.
"PLAN": any present or future employee benefit plan (as defined in
Section 3 of ERISA) and any trust created thereunder, covered by Title I or
Title IV of ERISA, established or maintained for employees of the Borrower or
the Guarantor.
"PRIME RATE": the rate of interest announced by NationsBank, N.A. from
time to time as its "Prime Rate".
"PROJECTIONS": the Borrower's forecasted consolidated and consolidating
balance sheets, profit-and-loss statements, and cash-flow statements, all
prepared on a basis consistent with the Borrower's historical financial
statements, together with appropriate supporting details and a statement of
underlying assumptions.
"REPORTABLE EVENT": as defined in Title IV of ERISA.
"SBA": the United States Small Business Administration, an agency of
the United States government.
"SBA COMMITMENT": the SBA's commitment to purchase a portion of the
loans equal to 40% of the cost of the property financed, on a basis whereby the
SBA's lien on the property financed is subordinated to the Borrower's lien on
that property, upon completion of the construction period for the underlying
property.
"SECURITIES": any share(s) of beneficial or equity interest or capital
stock or any other instrument commonly understood to be a "security", excluding
promissory notes issued for money borrowed in commercial transactions.
"SOLVENT": has capital sufficient to carry on its business and
transactions and all business and transactions in which it is about to engage,
is able to pay its debts as they mature, and owns property having a value, both
at fair valuation and at present fair saleable value, greater than the amount
required to pay its debts.
"SUBORDINATED DEBT": EBC's debt that is subordinated (as to right and
time of payment) to the Obligations under the Subordination Agreement, and any
other debt of EBC, the Borrower, or EFC that is subordinated (as to right and
time of payment) to such party's obligations to the Lender in a manner
satisfactory to the Lender.
-5-
"SUBORDINATION AGREEMENT": the Amended and Restated Agreement of
Subordination and Assignment, dated the date of this Agreement, of Carolina
Investors, Inc. and EBC in favor of NationsBank, N.A., as lender and agent, and
Hibernia, as lender.
"SUBSIDIARY" of any designated corporation: any other corporation more
than 20% of the shares of voting stock of which is owned, directly or
indirectly, by such designated corporation, including subsidiary of a
subsidiary.
"TANGIBLE NET WORTH": the total assets of the Borrowing Group and their
consolidated Subsidiaries, plus Subordinated Debt, minus Total Liabilities
(excluding from the definition of total assets the amount of (a) any write-up in
the book value of any asset resulting from a revaluation thereof after December
31, 1992, (b) treasury stock, (c) Receivables and other amounts due from
stockholders and other Affiliates, (d) unamortized debt discount and expense and
(e) patents, trademarks, trade names, goodwill, deferred charges, organizational
expenses and other intangible assets, all determined in accordance with GAAP).
"TOTAL LIABILITIES": all obligations of the Borrowing Group and their
consolidated Subsidiaries to pay money, excluding Subordinated Debt.
1.2 ACCOUNTING TERMS. All accounting terms used
herein shall be construed in accordance with GAAP applied consistently with
those principles applied in the preparation of the financial statements referred
to in Section 6.6, and all financial data submitted pursuant to this Agreement
shall be prepared in accordance with GAAP. In the event of ambiguities in GAAP,
the more conservative principle or interpretation shall be used.
1.3 USE OF DEFINED TERMS. Any defined term used
in the plural preceded by "the" encompasses all members of the relevant class.
Any defined term used in the singular preceded by "any" indicates any number of
the members of the relevant class. Any agreement or instrument referred to in
Section 1.1, or the term "Agreement", means such agreement or instrument as from
time to time supplemented and amended. A definition in singular form applies to
the plural form of the term, and vice versa.
1.4 SECTION AND EXHIBIT REFERENCES, ETC. References to sections,
exhibits, and the like refer to those in or attached to this Agreement unless
otherwise specified.
2. AMOUNT AND TERMS OF THE LOANS
2.1 THE LOANS. (a) REVOLVING LOANS. The Lender agrees to
make loans to the Borrower, and the Borrower agrees to borrow from the Lender,
upon request of the Borrower from time to time, up to 80% of the Borrower's
Eligible Loans (the sum of the Eligible Loans being the "BORROWING BASE");
PROVIDED, that the total amount of all Loans outstanding at any time under this
sentence shall not exceed $5,000,000. The amounts of such Loans shall be
determined in the sole discretion of the Lender to be consistent with the value
of the Eligible Loans, taking into account all fluctuations of the value thereof
in light of the Lender's experience and sound business principles.
-6-
Such determinations shall be subject to the requirements of good faith on the
Lender's part, the Borrower's undertakings hereunder, and especially the
Borrower's grant to the Lender of a security interest in the Collateral as
security for the Loans and all other Obligations of the Borrower to the Lender,
which will, of necessity, fluctuate in amount, and to the condition that the
Lender at all times be fully secured. To the extent necessary to reduce the
total amount of all Loans outstanding to the maximum amount then available under
clauses (i) and (ii) of this Section 2.1, the Borrower shall pay to the Lender,
on demand, the amount of outstanding Loans in excess of that maximum amount.
An Eligible Loan shall be included in the Borrowing Base when the
Borrower has provided the Lender with a copy of the related SBA Commitment, the
original loan documentation for that loan (to the extent requested by the
Lender), and such other documentation as the Lender reasonably requests, by fax
or otherwise.
(b) OVERADVANCES. The Lender may make Overadvances as, in its sole and
absolute discretion, it determines to lend. Any such Overadvances may be
evidenced by a written agreement between the Lender and the Borrower, which
agreement may provide, at the Lender's option, for interest and fees on such
Overadvances in addition to those specified hereunder. Except to the extent
otherwise provided in any such agreement, any such Overadvances shall be
"Loans", shall be repayable upon demand, and shall in all other respects be
subject to the terms and conditions of this Agreement.
2.2 INTEREST AND OTHER CHARGES. The Loans
shall bear interest on the average daily net balance thereof, calculated
monthly, at a fluctuating rate of interest equal to the Prime Rate. Changes in
the rate of interest shall be effected monthly to reflect changes in the Prime
Rate, as follows: The rate shall be adjusted on the first day of each month
based on the Prime Rate in effect at the close of business on the last Banking
Day of the preceding calendar month. Interest shall be due and payable monthly,
on the first day of each month, for the preceding month. The final payment of
all accrued and unpaid interest shall be due and payable on the date that the
outstanding principal amount of the Loans is paid or due and payable in full.
After an Event of Default, interest shall also be due and payable upon the
Lender's demand from time to time.
The Lender shall inform the Borrower of the amount of interest due and
payable as of each payment date set forth in the preceding paragraph, and the
Borrower shall pay the interest when due or the Lender may, in its discretion,
charge such amount to the Borrower's account under this Agreement.
As additional consideration for the credit facility established in
Section 2.1, the Borrower agrees to pay to the Lender a fee, payable on the
first day of each month for the preceding month, equal to the average unused
principal portion of the maximum loan facility hereunder (I.E., $5,000,000 minus
the average daily principal amount of Loans outstanding) times 0.125% per annum.
7
For interest computation purposes, Borrower's account will be credited
for each remittance received on the day that the underlying funds are collected;
the day of receipt of funds shall be deemed to be the following Banking Day if
the receipt is after the Lender's cutoff time for receipt of funds or if such
day is not a Banking Day.
If the outstanding principal amount of the Loans becomes due and
payable or if any payment of principal or interest is not timely made, or (at
the Lender's option) if any Event of Default exists, interest shall accrue on
the unpaid principal balance of the Loans or on such defaulted principal
payment, from the date that the Loans became so due and payable or that the
defaulted payment was not timely made, at a rate of 4% per annum above the Prime
Rate. Changes in the rate shall be effected monthly to reflect changes in the
Prime Rate as follows: The rate shall be adjusted on the first day of each month
based on the Prime Rate in effect at the close of business on the last Banking
Day of the preceding calendar month. Such interest shall continue to accrue
until the date of payment of all principal and accrued but unpaid interest or
such defaulted payment, as applicable, and shall be due and payable upon demand
from time to time by the Lender.
2.3 COMPUTATION OF INTEREST AND OTHER CHARGES. Interest on the
Loans, and other periodic charges hereunder, shall be computed on the basis
of a 360-day year and actual days lapsed.
2.4 CHARGES. The Borrower and the Lender hereby agree that
the only charges imposed by the Lender upon the Borrower for the use of money in
connection herewith are and shall be the interest described in Section 2.2. All
other charges imposed by the Lender upon the Borrower in connection with the
Loans, any commitment fees, collection fees, letter of credit fees, facility
fees, origination fees, prepayment charges or early termination fees, default
charges, late charges, attorneys' fees, and reimbursement for costs and expenses
paid by the Lender to third parties, or for damages incurred by Lender, are and
shall be deemed to be charges made to compensate the Lender for underwriting or
administrative services and costs and other services or costs performed and
incurred, and to be performed and incurred, by the Lender in connection with the
Loans, and shall under no circumstances be deemed to be charges for the use of
money.
In no event shall the amount of interest due or payable hereunder
exceed the maximum rate of interest allowed by applicable law, and if any such
payment is made by the Borrower or received by the Lender, then such excess sum
shall be credited as a payment of principal, unless the Borrower notifies the
Lender, in writing, that the Borrower elects to have such excess sum returned to
it forthwith. It is the express intent hereof that the Borrower not pay and the
Lender not receive, directly or indirectly, in any manner whatsoever, interest
in excess of that which may be lawfully paid by the Borrower under applicable
law.
2.5 PAYMENT. All payments by the Borrower shall be made to the Lender
at its address referred to in Section 11.3 hereof in lawful money of the United
States of America and in immediately available funds. The Borrower shall
establish a special collections account, at a bank satisfactory to the Lender
(which may be an Affiliate of the Lender), to collect payments on the Borrower's
loans and pay them to the Lender.
-8-
2.6 PAYMENT ON NON-BANKING DAYS.
Whenever any payment to be made hereunder shall be stated to be due on a day
which is not a Banking Day, such payment shall be made on the following Banking
Day, and such extension of time shall be included in the computation of
interest.
2.7 EFFECTIVE DATE AND TERMINATION.
This Agreement shall be effective on the date set forth in the first paragraph
of this Agreement, and shall continue in full force and effect until December
29, 2000, at which time all of the Borrower's Obligations hereunder shall be
due. If the Borrower terminates this Agreement other than on December 29, 2000
or any subsequent anniversary thereof, the Borrower shall pay to the Lender an
early termination fee equal to $25,000 for any termination before December 29,
1998, $17,000 for any termination after December 29, 1998 and before December
29, 1999, and $8,500 for any termination thereafter not on a December 29. Upon
the occurrence of an Event of Default, the Lender shall have the right to
terminate this Agreement at any time without notice. This Agreement shall
automatically terminate upon the termination of the EBC L&SA. Notwithstanding
any termination of this Agreement, the Lender shall retain all of its rights and
remedies hereunder (including its security interest in the Collateral), and the
Borrower shall continue to be bound by all the terms, conditions, and provisions
hereof until all of the Obligations of every nature have been fully disposed of,
concluded, finally paid, satisfied, and liquidated.
2.8 STATEMENTS OF ACCOUNT. The Lender shall
render a statement of account monthly, and, absent manifest error, such
statement rendered by the Lender shall bind the Borrower and the Lender (unless
the Borrower or the Lender notifies the other in writing to the contrary within
30 days after the date of each statement rendered; and any such notice shall be
deemed an objection only to those items specifically objected to therein).
3. SECURITY INTERESTS
As security for the full payment and performance of the Obligations,
the Borrower hereby grants to the Lender a security interest in all of the
following property and interests in property of the Borrower, whether now owned
or existing or acquired or arising in the future or in which the Borrower now
has or in the future acquires any rights, and wherever located:
(a) all right, title, and interest in any loan made by the Borrower,
including all related documentation, and all guarantees, collateral, and other
security therefor,
(b) all of the Borrower's accounts, inventory, general intangibles,
instruments, chattel paper, documents, equipment, and other goods,
(c) all accessions to, substitutions for, and replacements, products,
and proceeds of any of the foregoing, including insurance proceeds and rental
payments, and
-9-
(d) all books and records (including customer lists, credit files,
computer programs, print-outs, and other computer materials and records)
pertaining to any of the foregoing.
The Borrower shall execute and deliver all supplemental documentation
that the Lender from time to time requests to perfect or maintain the perfection
of the security interest granted in this Section, and shall pay (or reimburse
the Lender for) the cost of filing or recording any such documentation, on
demand.
4. CONDITIONS PRECEDENT TO ADVANCES
4.1 DOCUMENTS. The determination by the Lender to make
Advances is subject to the Lender's having received the following, in form and
substance satisfactory to the Lender:
(a) the Guarantee,
(b) the Borrower's Secretary's Certificate,
(c) the Borrower's CEO's Certificate,
(d) certified copies of all documents evidencing other
necessary corporate action and governmental approvals, if any, with
respect to this Agreement,
(e) the Opinion,
(f) appropriate UCC-1 financing statements,
(g) the documentation described in Section 5.1 for each loan
for which an Advance is made, and
(h) such other documentation as the Lender reasonably
requests.
4.2 OTHER CONDITIONS PRECEDENT. In addition to the foregoing,
any obligation of the Lender to make each Advance is subject to the
following conditions precedent: (a) the representations and warranties
contained in Section 6 (except 6.13, 6.17, and 6.19) hereof shall be
correct on and as of the date of the Advances with the same effect as though
made on and as of such date, except to the extent that such representations and
warranties relate solely to an earlier date; (b) since the date of the
statements referred to in Section 6.6 hereof, no materially adverse change shall
have occurred in the Borrower's business, prospects, condition, affairs,
operations, or assets, nor in its right or ability to carry on its operations;
(c) no Default shall exist or would result from the Advance; (d) the Lender in
its sole discretion determines that such Advance will be fully secured, as
provided for in Section 2.1, and will not cause the outstanding balance of the
Loans to exceed the limits described in Section 2.1; and (e) in the case of the
first Advance, the Lender shall have received from the Borrower a non-refundable
$20,000 closing fee.
-10-
5. CLOSING PROCEDURES.
5.1 TRANSFERS OF LOAN DOCUMENTS. Before the Lender funds an Advance for
an Eligible Loan, the Borrower shall provide the Lender with a copy of the
related SBA Commitment, all original loan documentation for that loan (to the
extent requested by the Lender), and such other documentation as Lender
reasonably requests, by fax or otherwise. The Borrower shall deliver the
original of each underlying note to the Lender by the third Banking Day
following the closing for the related Eligible Loan. In addition, if the
Borrower requests a Loan for which the Borrowing Base would be insufficient
without the Lender's having a perfected security interest in the related
underlying note, then if and to the extent that the Lender so requests, the
Borrower shall execute and deliver to the Lender the underlying note and all
other documents relating to that Eligible Loan, and properly executed
assignments of each such document, in recordable form acceptable to the Lender
in its sole discretion.
The originals of all such collateral, loan, and other documents (other
than the originals of each underlying note for the related Eligible Loan, which
shall be delivered to the Lender in accordance with the previous paragraph)
shall be held by the Borrower unless specifically requested by the Lender. The
Lender may hold any such specifically-requested documents until the Lender
releases its security interest in such Collateral pursuant to Section 5.2
(unless an Event of Default exists, in which case the Lender shall have its
right to pursue the rights and remedies).
Neither the Lender's execution of this Agreement nor its taking of any
action contemplated or permitted hereunder shall constitute or be deemed to be
an assumption of any of the Borrower's liabilities or obligations, and the
Lender shall not thereby be deemed to have consented to any reporting
requirements of, or other regulations by, the SBA.
5.2 RELEASE OF SECURITY INTEREST IN COLLATERAL. Upon receipt of payment
in full of any Loan, the Lender shall release its security interest in the
related loan, and shall return any related note that it holds.
6. GENERAL REPRESENTATIONS AND WARRANTIES.
In order to induce the Lender to enter into this Agreement and to make
Advances hereunder, the Borrower represents and warrants the following:
6.1 ORGANIZATION, STANDING, ETC. The Borrower is a
corporation duly organized, validly existing, and in good standing
under the laws of South Carolina, and has all requisite power and authority
(corporate and otherwise) to own and operate its properties and to carry on its
business as now conducted and proposed to be conducted; and the Borrower has all
requisite power and authority (corporate and otherwise) to execute, deliver, and
perform its obligations under this Agreement and all other documents executed in
connection therewith.
11
6.2 ENFORCEABILITY. This Agreement, and all other documents executed in
connection with the Loans, when delivered for value received, shall constitute
valid and binding obligations of the Borrower enforceable in accordance with
their terms.
6.3 QUALIFICATION. The Borrower is duly qualified, licensed, or
domesticated, and in good standing as a foreign corporation duly authorized to
do business, in all jurisdictions in which the character of its properties owned
or the nature of its activities conducted makes such qualification, licensing,
or domestication necessary, as follows: Alabama, Florida, Louisiana,
Mississippi, North Carolina, and Tennessee.
6.4 COMPLIANCE WITH ARTICLES OF INCORPORATION, BY-LAWS, AND OTHER
INSTRUMENTS, ETC. (a) The Borrower is not in violation of any material term of
its articles of incorporation or by-laws, and no event, status, or condition has
occurred or exists which upon notice or lapse of time, or both, would constitute
a violation thereof; (b) to the best of its knowledge, the Borrower is not in
violation of any material term of any mortgage, indenture, or agreement relating
to outstanding borrowings to which it is a party, or of any judgment, decree, or
order to which it is subject, or of any other instrument, lease, contract, or
agreement to which it is a party, or of any statute, or governmental rule or
regulation applicable to it, and no event, status, or condition has occurred or
exists which upon the giving of notice or lapse of time, or both, would
constitute a material violation of any such term; (c) the Borrower's execution,
delivery, and performance of this Agreement and the other instruments and
agreements provided for by this Agreement to which the Borrower is, or is to be,
a party, and the carrying out of the transactions contemplated hereby and
thereby have been duly authorized by all requisite action on the part of the
Borrower (corporate and otherwise) and will not result in any violation of the
articles of incorporation or by-laws of the Borrower, or violate or constitute a
default under any term of anything described in clause (b) above, or result in
the creation of any mortgage, lien, encumbrance or charge upon any of the
properties or assets of the Borrower pursuant to any term of anything described
in clause (b) above; and (d) there is no term of anything described in clause
(b) above which materially adversely affects or in the future may (so far as the
Borrower can now foresee) materially adversely affect the Borrower's business,
prospects, condition, affairs, operations, properties, or assets.
6.5 SUBSIDIARIES; PARENT. The Borrower has no Subsidiary. EGI owns all
the stock of the Borrower.
6.6 FINANCIAL STATEMENTS. The Borrower has furnished the Lender with
copies of the fiscal year-end consolidated and consolidating balance sheet of
EGI and its consolidated subsidiaries as at December 31, 1996, and the
consolidated and consolidating statements of income and of cash flows of such
corporations for such fiscal year, which annual financial statements have been
audited by KPMG Peat Marwick LLP, independent certified public accountants; and
copies of such financial statements for each month thereafter through
___________, 1997, duly certified by the chief financial officer of EGI. Such
financial statements are complete and have been prepared in accordance with GAAP
applied on a basis consistent with the accounting principles applied in the
preceding fiscal period, and present fairly the financial condition of EGI as at
the dates
-12-
indicated and the results of the operations of EGI for such periods. Such
financial statements show all liabilities (direct, indirect, and contingent,
including guarantee and surety obligations) of the Borrower and the Guarantor as
of the respective dates thereof, except those arising in the ordinary course of
business since the date of the last of such financial statements.
6.7 CHANGES IN FINANCIAL CONDITION. Since the date of the annual
financial statements referenced in Section 6.6, there has been no change in the
assets, liabilities, or financial condition of the Borrower or the Guarantor
from that set forth or reflected in the fiscal year-end balance sheet referred
to in Section 6.6, other than changes in the ordinary course of business, none
of which has been, either in any case or in the aggregate, materially adverse.
6.8 TAX RETURNS AND PAYMENTS. All federal, state, and local tax returns
and reports of the Borrower or the Guarantor required to be filed have been
filed, and all taxes, assessments, fees, and other governmental charges upon the
Borrower or the Guarantor, or upon any of the properties, assets, incomes, or
franchises of either, which are due and payable in accordance with such returns
and reports, have been paid, other than those presently (a) payable without
penalty or interest, or (b) contested in good faith and by appropriate and
lawful proceedings prosecuted diligently. The aggregate amount of the taxes,
assessments, charges, and levies so contested is not material to the condition
(financial or otherwise) and operations of the Borrower or the Guarantor. The
charges, accruals, and reserves on the books of the Borrower and the Guarantor
in respect of federal, state, and local taxes for all fiscal periods to date are
adequate, and the Borrower knows of no unpaid assessment for additional federal,
state, or local taxes for any such fiscal period or of any basis therefor.
6.9 TITLE TO PROPERTIES AND ASSETS; LIENS; ETC. The Borrower has (a)
good and marketable title to its properties and assets, including the Collateral
and the properties and assets reflected in the fiscal year-end balance sheet
referred to in Section 6.6, except properties and assets disposed of since the
date of such balance sheet in the ordinary course of business, and (b) good and
marketable title to its leasehold estates and such properties, assets, and
leasehold interests are subject to no covenant, restriction, easement, right,
lease, or Lien, other than Permitted Liens.
6.10 PATENTS; TRADEMARKS; FRANCHISES; ETC. The Borrower owns or has the
right to use all of the patents, trademarks, service marks, trade names,
copyrights, franchises, and licenses, and rights with respect thereto, necessary
for the conduct of its business as now conducted, without any known conflict
with the rights of others, and, in each case, subject to no Lien, lease,
license, or option, except as specified on Schedule 2. Each such asset or
agreement is in full force and effect, and the holder thereof has fulfilled and
performed all of its obligations with respect thereto. No event has occurred or
exists which permits, or after notice or lapse of time or both would permit,
revocation or termination, or which materially adversely affects or in the
future may materially adversely affect, the rights of such holder thereof with
respect thereto. No other license or franchise is necessary to the operations of
the business of the Borrower as now conducted or proposed to be conducted. The
Borrower does not do business (and has not done business since the date that it
was formed) under any trade names or tradestyles other than those listed on
Schedule 2.
-13-
6.11 LITIGATION, ETC. Except as specified on Schedule 3, there are no
actions, proceedings, or investigations, however described or denominated,
pending or (to the knowledge of the Borrower) threatened (or any basis therefor
known to the Borrower) which, either in any case or in the aggregate, might
result in any materially adverse change in the Borrower's or the Guarantor's
business, prospects, condition, affairs, operations, properties, or assets, or
in its right or ability to carry on its operations as now conducted or proposed
to be conducted, or might result in any material liability on the part of the
Borrower or the Guarantor, and none which questions the validity of this
Agreement or any of the other instruments or agreements provided for by this
Agreement or of any action taken or to be taken in connection with the
transactions contemplated hereby or thereby.
6.12 ADVERSE DEVELOPMENTS. Since the date of the latest financial
statements referred to in Section 6.6, neither the financial condition, business
operations, affairs, or prospects of the Borrower or the Guarantor, nor the
properties or assets of either, have been materially adversely affected in any
way as the result of any legislative or regulatory change, or any revocation,
amendment, or termination, or any pending or threatened such action, or any
franchise or license or right to do business, or any fire, explosion, flood,
drought, windstorm, earthquake, accident, casualty, labor trouble, riot,
condemnation, requisition, embargo or Act of God or the public enemy or of armed
forces, or otherwise, whether or not insured against.
6.13 DISCLOSURE. To the best of the Borrower's knowledge, neither this
Agreement nor the financial statements referred to in Section 6.6 nor any other
document, certificate or statement furnished to Lender by or on behalf of the
Borrower or the Guarantor in connection with the transactions contemplated
hereby contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained therein or
herein not misleading.
6.14 MARGIN SECURITIES. The Borrower is not engaged principally or as
one of its important activities in the business of extending credit for the
purpose of purchasing or carrying margin stock (within the meaning of Regulation
U of the Board of Governors of the Federal Reserve System). No part of the
proceeds of the Loans has been or will be used, directly or indirectly, to
purchase or carry any margin securities within the meaning of Regulation U.
6.15 INVESTMENT COMPANY. The Borrower is not an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
6.16 ERISA. The Borrower, the Guarantor, and each Plan is in compliance
with those portions of ERISA and the Code pertaining to each Plan. No Plan that
is subject to the minimum funding standards of ERISA or the Code has incurred
any accumulated funding deficiency within the meaning of ERISA or the Code.
Neither the Borrower nor the Guarantor has incurred, and no facts lead the
Borrower to believe it or the Guarantor will incur, any liability to the Pension
Benefit
-14-
Guaranty Corporation in connection with any Plan. The assets of each Plan that
is subject to Title IV of ERISA are sufficient to provide the benefits under
such Plan which the Pension Benefit Guaranty Corporation would guarantee the
payment thereof if such Plan terminated, and are also sufficient to provide all
other benefits due under the Plan. No Reportable Event has occurred and is
continuing with respect to any Plan. No Plan nor any trust created under a Plan,
nor any trustee or administrator thereof, has engaged in a "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the Code)
which would subject any Plan, any trust created thereunder, or any trustee or
administrator thereof, or any party dealing with any Plan or any such trust, to
the tax or penalty on "prohibited transactions" imposed by Section 502 of ERISA
or Section 4975 of the Code.
Neither the Borrower nor the Guarantor is required to contribute to or
is contributing to a "multiemployer pension plan" (as defined in the
Multiemployer Pension Plan Amendments Act of 1980), and neither the Borrower nor
the Guarantor has any "withdrawal liability" (as defined in such Act) to any
multiemployer pension plan.
6.17 LOCATIONS. The Borrower's principal place of business and chief
executive office is located at its address specified in Section 11.3.
6.18 SOLVENCY. The Borrower is Solvent.
6.19 NAME CHANGE; MERGER. During the past five years, the Borrower has
not changed its corporate name or been party to a merger or consolidation,
except as specified in Schedule 2.
7. AFFIRMATIVE COVENANTS
The Borrower covenants, for so long as any Loan is outstanding or any
of the other Obligations remains unpaid or unperformed, as follows:
7.1 INSURANCE. The Borrower shall insure its property against all risks
to which it is exposed, including loss, damage, fire, theft, and all other such
risks, and in such amounts, as would be prudent for similar businesses similarly
situated, including loss, damage, fire, theft, and all other such risks, and in
such amounts, with such companies, under such policies, and in such form as
shall be satisfactory to the Lender. In addition, the Borrower will maintain
comprehensive public liability and worker's compensation insurance and such
other insurance against loss or damage as are customarily carried by
corporations similarly situated, with reputable insurers, in such amounts, with
such deductibles, and by such methods as shall be adequate and in any event in
amounts of not less than the amounts generally maintained by other companies
engaged in similar businesses.
7.2 TAXES AND LIABILITIES. The Borrower shall pay and discharge, when
due, all taxes, assessments, and governmental charges or levies imposed upon it
or its income or profits, or against its properties, and all lawful claims
which, if unpaid, might become a lien or charge upon any of its properties;
PROVIDED, that the Borrower shall not be required to pay any such tax,
assessment, charge, levy, or claim so long as it is being contested in good
faith and by appropriate
-15-
and lawful proceedings diligently pursued and with respect to which adequate
reserves have been set aside on its books.
7.3 ACCOUNTING; FINANCIAL STATEMENTS; ETC. The Borrower will deliver to
Lender:
(a) within 30 days after the end of each of the first 11
months in each fiscal year of the Borrower a consolidating balance sheet of the
Borrowing Group and their consolidated subsidiaries (including the Borrower), as
at the end of such period and statements of income and of cash flows of such
corporations for such period and for the year-to-date period then ended, setting
forth in each case in comparative form the figures for the corresponding period
of the previous fiscal year, in form and detail as reasonably required by the
Lender, and certified as complete and correct by the chief financial officers of
the Borrowing Group, together with a certificate by such officers stating that,
as of the date of such certification, no Default exists (or, if any Default
exists, specifying the nature thereof and what action the Borrower has taken, is
taking or proposes to take with respect thereto);
(b) within 90 days after the end of each fiscal year, a
consolidated balance sheet of EGI and a consolidating balance sheet of EGI and
its consolidated subsidiaries (including the Borrower) as at the end of such
fiscal year, and statements of profit and loss, shareholders' equity, and
changes in cash flows of such corporations for such year, setting forth in each
case in comparative form the figures for the previous fiscal year in form and
detail as reasonably required by the Lender, and accompanied by an unqualified
report and opinion on such financial statements (including on the supplemental
schedules) from KPMG Peat Marwick LLP (or other certified public accountants
satisfactory to the Lender), which report and opinion shall be prepared in
accordance with GAAP, together with a certificate by the chief financial officer
of EGI of the character specified in Section 7.3(a), and a certificate by such
accountants stating whether or not their examination has disclosed the
occurrence or existence of any Default, and, if their examination has disclosed
a Default, specifying the nature and period of existence thereof, and
demonstrating as at the end of such accounting period in reasonable detail
compliance during such accounting period with Sections 6.18, 7.6, 7.13, 7.14,
7.15, 8.10, 8.11, 8.13, and 8.14;
(c) copies of all other statements or reports prepared by or
supplied to the Borrower by its accountants or auditors reflecting the financial
position of the Borrower;
(d) within 30 days after the end of each fiscal year,
Projections for the next three years, year-by-year;
(e) within 90 days after the end of each fiscal year,
financial statements, of the type described in Section 7.3(b), for the
Guarantor; and
(f) with reasonable promptness, such other data and
information as the Lender from time to time reasonably requests.
-16-
7.4 INSPECTION. The Borrower will permit authorized representatives
designated by the Lender (a) to visit and inspect any of the properties of the
Borrower, including its books and records (and to make extracts therefrom), and
to discuss its affairs, finances, and accounts with its officers, directors,
employees, and accountants, all at such reasonable times and as often as the
Lender reasonably requests, and (b) to attend the Borrower's credit committee
meetings. The Borrower will at all times keep accurate and complete records with
respect to the Collateral.
7.5 MAINTENANCE OF CORPORATE EXISTENCE; COMPLIANCE WITH LAWS. The
Borrower shall at all times preserve and maintain in full force and effect its
corporate existence, powers, rights, licenses, permits, and franchises in the
jurisdiction of its incorporation, and shall operate in full compliance with all
applicable laws, statutes, regulations, certificates of authority, and orders in
respect of the conduct of its business, and shall qualify and remain qualified
as a foreign corporation in each jurisdiction in which such qualification is
necessary or appropriate in view of its business and operations.
7.6 USE OF PROCEEDS. The proceeds of the Loans will be used solely for
repaying existing debt, and for general corporate purposes. No part of the
proceeds will be used to cause a violation of Section 6.14.
7.7 NOTICE OF DEFAULT. The Borrower shall promptly notify the Lender in
writing upon the occurrence or existence of any known Default, and shall provide
to the Lender with such written notice a detailed statement by a responsible
officer of the Borrower of all relevant facts and the action being taken or
proposed to be taken by the Borrower with respect thereto.
7.8 MAINTENANCE OF PROPERTIES. The Borrower shall maintain or cause to
be maintained in good repair, working order, and condition all properties used
or useful in its business, and from time to time will make or cause to be made
all appropriate repairs, renewals, and replacement thereof. The Borrower will
not do or permit any act or thing which might impair the value or commit or
permit any waste of its properties or any part thereof or permit any unlawful
occupation, business, or trade to be conducted on or from any of its properties.
7.9 NOTICE OF ERISA DEVELOPMENTS. As soon as possible and in any event
within 30 days after the Borrower knows or has reason to know of any Reportable
Event or "prohibited transaction" (as defined in Section 6.16) with respect to
any Plan or that the Pension Benefit Guaranty Corporation or the Borrower has
instituted or will institute proceedings under ERISA to terminate a Plan subject
to Title IV of ERISA, or a partial termination of a Plan has or is alleged to
have occurred, or any litigation regarding a Plan or naming the trustee of a
Plan or the Borrower or the Guarantor with respect to a Plan is threatened or
instituted, the Borrower shall provide to the Lender the written statement of
the chief financial officer of the Borrower setting forth details of such
Reportable Event, prohibited transaction, termination proceeding, partial
termination, or litigation and the action being or proposed to be taken with
respect thereto, together with copies of the notice of such Reportable Event or
any other notices, applications, or forms submitted to the Pension Benefit
Guaranty Corporation, Internal Revenue Service, or United States Department of
Labor, and copies of any notices or correspondence received from the Pension
-17-
Benefit Guaranty Corporation, Internal Revenue Service, or United States
Department of Labor, and copies of any pleadings, notices, or other documents
relating to such litigation.
7.10 NOTICE OF LITIGATION OR ADVERSE CHANGE. The Borrower shall
promptly give to the Lender written notice (a) of all threatened or actual
actions, suits, investigations, or proceedings by or before any court,
arbitrator, or governmental department, commission, board, bureau, agency or
other instrumentality (state, federal, or foreign), affecting the Borrower or
the Guarantor or the rights or other properties of the Borrower or the
Guarantor, except any litigation or proceedings which is not likely to affect
the financial condition of the Borrower or the Guarantor or to impair the right
or ability of the Borrower or the Guarantor to discharge the Obligations; (b) of
any materially adverse change in the condition (financial or otherwise) of the
Borrower or the Guarantor; and (c) of any seizure or levy upon any part of any
of the Borrower's or the Guarantor's properties under any process or by a
receiver.
7.11 PAYMENT OF LOANS. The Borrower shall punctually pay the principal
and interest on the Loans, and all other sums falling due hereunder or under any
other documents executed in connection with the Loans, in accordance with the
terms hereof and thereof.
7.12 NOTIFICATION OF CHANGE OF NAME OR BUSINESS LOCATION. The Borrower
shall notify the Lender immediately of each change in the Borrower's corporate
name and trade names, in the location of the Borrower's principal place of
business, in each location where any of the Collateral is kept, and the office
where the Borrower's books and records are kept.
7.13 TANGIBLE NET WORTH. The Borrowing Group shall maintain at all
times a Tangible Net Worth of not less than $8,000,000 during 1997, and
continuing to increase by $1,000,000 each fiscal year thereafter.
7.14 RATIO OF TOTAL LIABILITIES TO TANGIBLE NET WORTH. The Borrowing
Group shall maintain at all times a ratio of Total Liabilities to Tangible Net
Worth of not more than 6 to 1.
7.15 INTEREST COVERAGE RATIO. The Borrowing Group shall maintain (x)
for the four-quarter period concluding at the end of each of the first three
fiscal quarters in each fiscal year of the Borrowing Group, a ratio of EBIT to
Interest on Senior Funded Debt of at least 1.15 to 1, and (y) for the
four-quarter period concluding at the end of each fiscal year of the Borrowing
Group, a ratio of EBIT to Interest on Senior Funded Debt of at least 1.5 to 1.
7.16 EGI SUBSIDIARY. The Borrower shall at all times be wholly-owned
Subsidiary of EGI.
7.17 COLLATERAL REPORTING. The Borrower shall provide to the Lender, on
a weekly basis, a borrowing base certificate in form acceptable to the Lender.
The Borrower shall provide to the Lender such other collateral reports as the
Lender may request from time to time.
-18-
8. NEGATIVE COVENANTS.
The Borrower covenants, for so long as any of the Loans is outstanding
or any of the other Obligations remains unpaid or unperformed, as follows:
8.1 DEBT. The Borrower will not obtain or attempt to obtain from any
party (other than for the purpose of repaying the Obligations in full) any
loans, advances, or other financial accommodations or arrangements other than
(a) the Obligations, (b) debt underlying any purchase money security interest
permitted by Section 8.2 not to exceed, in aggregated principal amount, $100,000
minus any such debt owed by EBC or EFC at any one time outstanding, (c)
unsecured borrowings not to exceed in the aggregate $500,000 minus any such debt
owed by EBC or EFC at any one time outstanding, (d) unsecured trade credit,
incurred in the ordinary course of business, having commercially customary
terms, and (e) borrowings from EBC, EFC, EGI or Carolina Investors, Inc. that
are fully subordinated to the Obligations.
8.2 LIENS. The Borrower shall not create, incur, assume, or suffer to
exist any Lien of any kind upon any of its property or assets (including the
Collateral), whether now owned or hereafter acquired, except (a) Liens in favor
of the Lender; (b) Liens existing on the date hereof and specified on Schedule
1; (c) Liens on property securing all or part of the purchase price of such
property if (1) such Lien is created contemporaneously with the acquisition of
such property, (2) such Lien attaches only to the specific item(s) of property
so acquired, (3) such Lien secures only the debt incurred to acquire such
property, and (4) the debt secured by such Lien is permitted by Section 8.1; and
(d) Liens for taxes, or for other claims, that are not then due.
8.3 GUARANTEES. The Borrower shall not guarantee, endorse, become
surety with respect to, or otherwise become directly or contingently liable for
or in connection with the obligations of any other Person, except by endorsement
of negotiable instruments for deposit or collection and similar transactions in
the ordinary course of business.
8.4 PLAN LIABILITIES. The Borrower shall not permit the aggregate
present value of accrued benefits of any Plan subject to Title IV of ERISA,
computed in accordance with actuarial principles and assumptions applied on a
uniform and consistent basis by an enrolled actuary of recognized standing
acceptable to the Lender, to exceed the aggregate value of assets of the Plan,
computed on a fair market value basis, or permit the aggregate present value of
vested benefits of any Plan subject to Title IV of ERISA, computed in accordance
with actuarial principles and assumptions applied on a uniform and consistent
basis by an enrolled actuary of recognized standing acceptable to the Lender, to
exceed the aggregate value of assets of the Plan, computed on a fair market
value basis.
8.5 FISCAL YEAR. The Borrower will not change its fiscal year from a
year ending on December 31 without prior written notice to the Lender.
8.6 OTHER TRANSACTIONS. The Borrower will not engage in any transaction
with any of its officers, directors, employees, or Affiliates, except for an
"arms-length" transaction on
-19-
terms no more favorable to the other party than would be granted to an
unaffiliated Person, which transaction shall be approved by its disinterested
directors and shall be disclosed in a timely manner to the Lender before being
consummated.
8.7 MERGER; SUBSIDIARY; ETC. The Borrower will not merge or consolidate
with any other corporation, form or acquire any Subsidiary, or issue any share
of capital stock.
8.8 SALE OF ASSETS. The Borrower will not sell, lease or otherwise
transfer all or any substantial part of its assets material to its operations,
except in the ordinary course of its business; PROVIDED, that it may in any
calendar year dispose of items of equipment having an aggregate market value of
not more than $50,000, minus any such equipment disposed of by EBC or EFC, if
the Borrower uses the proceeds of such disposition to acquire property of a
similar nature.
8.9 CHANGES IN BUSINESS. The Borrower will not engage in any business
other than the business presently conducted by it on the date of this Agreement
and business of substantially the same type or directly related thereto.
8.10 DIVIDENDS AND REDEMPTIONS. The Borrower will not declare or pay
any dividend (other than a dividend payable solely in common stock of the
Borrower) on any share of any class of its capital stock, or apply any of its
property or assets to the purchase, redemption, or other retirement of, or set
apart any sum for the payment of any dividends on, or for the purchase,
redemption, or other retirement of, or make any other distribution by reduction
of capital or otherwise in respect of, any shares of any class of capital stock
of the Borrower.
8.11 LOANS. The Borrower will not make any loans or advances to or
extend any credit to any Person except (a) the extension of trade credit in the
ordinary course of business, (b) advances to employees not to exceed to any one
employee a total of $5,000 minus any advances to such employee by EBC or EFC,
and (c) loans to Guarantor.
8.12 PLEDGE OF CREDIT. The Borrower will not pledge the Lender's credit
for any purpose whatsoever.
8.13 INVESTMENTS. The Borrower shall not purchase, acquire, or
otherwise invest in any Person except: (a) Eligible Loans, (b) direct
obligations of the United States of America maturing within one year from the
acquisition thereof, (c) certificates of deposit issued by, or investment
accounts in, banks or financial institutions having a net worth of not less than
$50,000,000, (d) commercial paper rated A-1 by Standard & Poor's Corporation or
P-1 by Xxxxx'x Investors Service, Inc., (e) overnight repurchase agreements
issued by the Lender or any corporate Affiliate of the Lender's, or (f) assets
received from foreclosing on a loan.
8.14 CAPITAL EXPENDITURES. The Borrowing Group shall not make or incur
Capital Expenditures in excess of $500,000 during any fiscal year of the
Borrower, unless the Lender gives its prior written consent (which shall not be
unreasonably withheld).
-20-
9. POWER OF ATTORNEY.
The Borrower hereby appoints and constitutes the Lender as its
attorney-in-fact to do any of the following if an Event of Default exists: to
receive, open, and dispose of all mail addressed to the Borrower pertaining to
Collateral (or appearing to the Lender possibly to pertain to Collateral); to
notify the postal authorities to change the address and delivery of mail
addressed to the Borrower to such address as the Lender shall designate; to
endorse the Borrower's name upon any notes, acceptances, checks, drafts, money
orders, and other forms of payment that come into the Lender's possession, and
to deposit or otherwise collect the same; to sign the Borrower's name on any
document relating to any Collateral; to execute in the name of the Borrower any
affidavits and notices with regard to any and all lien rights; and to do all
other acts and things necessary to carry out this Agreement. The Borrower hereby
waives notice of presentment, protest, and dishonor of any instrument so
endorsed by the Lender.
All the Lender's acts as attorney-in-fact are hereby authorized,
ratified, and approved by the Borrower, and the Borrower agrees that, as
attorney-in-fact, the Lender shall not be liable for any acts of omission or
commission, nor for any error of judgment or mistake of fact or law, except to
the extent of loss or damage caused directly and primarily by the Lender's gross
negligence or willful misconduct. This power, being coupled with an interest, is
irrevocable so long as this Agreement remains in effect or any of the
Obligations remains outstanding.
10. REMEDIES.
Upon the occurrence of any Event of Default, and at any time
thereafter, the entire outstanding principal amount of the Loans, together with
all accrued but unpaid interest thereon, and all other of the Obligations shall,
at the option of the Lender, immediately become absolute and due and payable,
without presentation, demand of payment, protest, notice for demand of payment,
protest and notice of nonpayment, or any other notice of any kind with respect
thereto, all of which are hereby expressly waived by the Borrower to the full
extent permitted by law. The Lender may exercise from time to time any rights
and remedies available to it under the Uniform Commercial Code and other
applicable law in Georgia or any other applicable jurisdiction. The Borrower
agrees, after the occurrence of any Event of Default, immediately to assemble at
the Borrower's expense all the Collateral at a convenient place acceptable to
the Lender, and to surrender such property to the Lender. The Borrower agrees to
pay all costs that the Lender pays or incurs to collect the Obligations or
enforce its rights hereunder. The Borrower agrees that the Lender may charge the
Borrower's account for, and that the Borrower will pay on demand, all costs and
expenses, including 15% of the total amount involved as attorneys' fees (not to
exceed the amount of attorneys' fees actually incurred), incurred: (i) to
liquidate any Collateral, (ii) to obtain or enforce payment of any Obligations,
or (iii) to prosecute or defend any action or proceeding either against the
Lender or against the Borrower concerning any matter growing out of or connected
with this Agreement or any Receivable or any Obligation. The Borrower agrees
that the Lender may apply any proceeds from disposing of the Collateral first to
any security interest(s), lien(s), or encumbrance(s) prior to the Lender's
security interest.
-21-
The Lender shall be entitled to hold or set off any sums and all other
property of the Borrower's, at any time to the credit of the Borrower or in the
possession of the Lender, whether by pledge or otherwise, or upon or in which
the Lender may have a lien or security interest.
Recourse to security shall not at any time be required, and the
Borrower shall at all times remain liable for the repayment to the Lender of all
Obligations in accordance with their terms, regardless of the existence or
non-existence of any Event of Default.
11. MISCELLANEOUS.
11.1 NO WAIVER; CUMULATIVE REMEDIES. No failure or delay on the part of
the Lender in exercising any right, power, or remedy hereunder, or under any
other document or agreement given by the Borrower or received by the Lender in
connection herewith, shall operate as a waiver thereof, and no waiver shall be
valid unless in writing signed by the Lender (and then only to the extent
therein stated); nor shall any single or partial exercise of any such right,
power, or remedy preclude any other or further exercise thereof or the exercise
of any other right, power, or remedy hereunder or thereunder. The remedies
herein and therein provided are cumulative and not exclusive of any remedies
provided by law or in equity.
11.2 AMENDMENTS, ETC. No amendment, modification, termination, or
waiver of any provision of this Agreement or of any other document or agreement
given by the Lender or received by the Borrower in connection herewith, nor
consent to any departure by the Borrower therefrom, shall in any event be
effective unless it is in writing and signed by the Lender (and then such waiver
or consent shall be effective only in the specific instance and for the specific
purpose for which given). No notice to or demand on the Borrower in any case
shall entitle the Borrower to any other or further notice or demand in similar
or other circumstances.
11.3 ADDRESSES FOR NOTICES, ETC. All notices, requests, demands, and
other communications provided for hereunder, other than routine communications
in the ordinary course of business, shall be in writing (including telecopies)
and mailed, telecopied, or delivered as follows:
if to the Borrower:
Emergent Commercial Mortgage, Inc.
00 X. Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxx X. Xxxx
Fax: (000) 000-0000
-22-
with a copy to:
Xxxx X. Xxxx, Xx.
Wyche, Burgess, Xxxxxxx & Xxxxxx
00 Xxxx Xxxxxxxxxx Xxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Fax: (000) 000-0000
if to the Lender:
NationsBank, N.A.
Business Credit Division
P. O. Xxx 0000
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxx X. Xxxxx
Fax: (000) 000-0000
or, as to each party, at such other address as it designates in a written notice
to the other party complying as to the delivery with the terms of this Section.
Except as otherwise expressly provided in this Agreement, all such notices,
requests, demands, and other communications shall, when mailed or telecopied, be
effective two Banking Days after being deposited in the mails (postage paid) or
when sent over a telecopier owned or operated by a party hereto with an
answerback response set forth on the sender's copy of the document, addressed as
aforesaid, and otherwise shall be effective upon receipt.
11.4 COSTS, EXPENSES, AND TAXES. The Borrower shall pay to the Lender,
on demand, all costs and expenses paid or incurred by the Lender in connection
with the preparation, reproduction, execution, delivery, administration, or
enforcement of this Agreement and other instruments and documents from time to
time delivered in connection with this Agreement, including the fees and
expenses of counsel for the Lender, and in connection with the Lender's initial
evaluation of the line of credit contemplated by this Agreement (including
travel and field exam expenses). In addition, the Borrower shall pay any and all
stamp and other taxes and recording and filing fees payable or determined to be
payable in connection with the execution and delivery of this Agreement and all
other instruments and documents from time to time delivered in connection with
this Agreement, and shall save and hold harmless the Lender from and against any
and all liabilities with respect to or resulting from any delay in paying or
failure to pay such taxes or fees.
11.5 COMMERCIAL TRANSACTION. THE BORROWER HEREBY ACKNOWLEDGES THAT THE
OBLIGATIONS AROSE OUT OF A "COMMERCIAL TRANSACTION" (AS DEFINED IN O.C.G.A. ss.
44-14-260(1), CONCERNING FORECLOSURE OF INTERESTS IN PERSONAL PROPERTY), AND
AGREES THAT AFTER ANY EVENT OF DEFAULT (AS "Event of Default" IS DEFINED IN
SECTION 1.1),
-23-
THE LENDER SHALL HAVE THE RIGHT TO AN IMMEDIATE WRIT OF POSSESSION
WITHOUT NOTICE OR HEARING. THE BORROWER KNOWINGLY AND INTELLIGENTLY WAIVES ANY
AND ALL RIGHTS IT MAY HAVE TO ANY NOTICE OR POSTING OF A BOND BY THE LENDER
PRIOR TO SEIZURE BY THE LENDER (OR THE LENDER'S TRANSFEREES, ASSIGNS, OR
SUCCESSORS IN INTEREST) OF THE COLLATERAL OR ANY PORTION THEREOF. THIS IS
INTENDED BY THE BORROWER AS A "WAIVER" AS DEFINED IN O.C.G.A. ss. 44-14-260(3)
(RELATING TO FORECLOSURE OF INTERESTS IN PERSONAL PROPERTY).
11.6 SUCCESSORS AND ASSIGNS. All of the terms of this Agreement, and
each of the documents and agreements executed and delivered pursuant to this
Agreement, shall bind, benefit, and be enforceable by the successors and
assignees of the parties hereto, whether so expressed or not. The Borrower shall
not assign or transfer this Agreement, or any of its rights hereunder, without
the prior written consent of the Lender.
11.7 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations,
warranties, covenants, and agreements contained herein or made in writing by the
Borrower in connection herewith shall survive the execution and delivery of this
Agreement and any and all other documents and instruments relating to or arising
out of any of the foregoing.
11.8 TIME IS OF THE ESSENCE. Time is of the essence of this Agreement.
11.9 HEADINGS. The headings in this Agreement are for convenience of
reference only, and are not a substantive part of the agreement.
11.10 ENTIRE AGREEMENT. This Agreement embodies the entire agreement
and understanding between the parties hereto and supersede all prior agreements
and understandings relating to the subject matter hereof and thereof.
11.11 SEVERABILITY. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law. In case any one or more of the provisions in this Agreement
shall for any reason be held to be prohibited by or invalid under applicable
law, such provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
11.12 COUNTERPARTS. This Agreement may be executed in separate
counterparts.
11.13 GOVERNING LAW; CONSENT TO JURISDICTION. THIS AGREEMENT AND THE
OTHER DOCUMENTS AND AGREEMENTS EXECUTED IN CONNECTION HEREWITH (UNLESS
SPECIFICALLY STIPULATED TO THE CONTRARY IN SUCH DOCUMENT OR AGREEMENT), AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER, SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF
GEORGIA
-24-
(DISREGARDING ANY CONFLICTS-OF-LAWS RULE THAT WOULD APPLY THE LAW OF ANY
OTHER JURISDICTION). THE BORROWER HEREBY IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE
JURISDICTION OF ANY UNITED STATES FEDERAL OR STATE COURT SITTING IN ATLANTA,
GEORGIA, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OF THE OTHER DOCUMENTS OR AGREEMENTS DESCRIBED OR CONTEMPLATED
HEREIN, AND THE BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF
SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH UNITED STATES
FEDERAL OR STATE COURT. SERVICE OF COPIES OF THE SUMMONS AND COMPLAINT AND ANY
OTHER PROCESS WHICH MAY BE SERVED ON THE BORROWER IN ANY SUCH ACTION OR
PROCEEDING MAY BE MADE BY MAILING OR DELIVERING A COPY OF SUCH PROCESS TO THE
BORROWER IN ACCORDANCE WITH SECTION 11.3 HEREOF.
11.14 WAIVER OF TRIAL BY JURY11.14 WAIVER OF TRIAL BY JURY. THE
BORROWER AND THE LENDER EACH WAIVE ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION
OR PROCEEDING RELATING TO TRANSACTIONS ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OF THE OTHER DOCUMENTS DESCRIBED OR CONTEMPLATED HEREIN.
-25-
IN WITNESS WHEREOF, the Borrower and the Lender have executed this Loan
and Security Agreement.
EMERGENT COMMERCIAL MORTGAGE, INC.
[Seal]
By: (Signature Illegible)
Title: CEO
Attest:
By: (Signature Illegible)
Secretary
Accepted this 13th day of June, 1997, in Atlanta, Georgia.
NATIONSBANK, N.A.
By: (Signature Illegible)
Title: VP
EXHIBIT A
BORROWER'S SECRETARY'S CERTIFICATE
FOR THE BENEFIT OF
NATIONSBANK, N.A.
I, Xxxxx X. Xxxx, Secretary of Emergent Commercial Mortgage, Inc. (the
"BORROWER"), a South Carolina corporation, hereby certify that:
1. Attached hereto as Exhibit 1 is a certified copy of the articles of
incorporation of the Borrower as originally filed, together with all amendments
thereto.
2. Attached hereto as Exhibit 2 is a true and correct copy of the
by-laws of the Borrower. Those by-laws have not been amended, modified, or
revoked, and are in full force and effect as of the date hereof.
3. Attached hereto as Exhibit 3 is a good standing certificate for the
Borrower issued by the South Carolina Secretary of State on ______________,
1997.
4. The Borrower has since the date of the certificate referred to in
paragraph 3 above through the date hereof remained in good standing under the
laws of the state of South Carolina.
5. No suit or proceeding for the dissolution or liquidation of the
Borrower has been instituted or is now threatened.
6. Attached hereto as Exhibit 4 is a true and complete copy of
resolutions of the Board of Directors of the Borrower, adopted at a meeting duly
called and held on ______________, 1997, at which meeting a quorum for the
transaction of business was present and acting throughout. The corporate action
in adopting those resolutions was duly taken at that meeting in accordance with
the provisions of law and of the Borrower's articles of incorporation and
by-laws, and those resolutions are now in full force and effect and have not
been modified in any respect.
7. The resolutions referred to in paragraph 6 authorized the Borrower
and its officers referred to therein to execute and deliver, and to do all
things necessary or appropriate for the payment and performance of all the
Borrower's obligations under, the Amended and Restated Loan and Security
Agreement (the "AGREEMENT") dated as of __________________, 1997, between
NationsBank, N.A. (the "LENDER") and the Borrower, and all certificates,
agreements and other documents to be executed and delivered to the Lender by
the Borrower pursuant to the Agreement, and pursuant to the specific
resolutions referred to in paragraph 6.
8. The following persons have been duly elected, have duly qualified,
as of the date of the execution of the Agreement were, and on the date hereof
are, officers of the Borrower, holding the offices set opposite their names
below, and the signatures set opposite their names below are their genuine
signatures:
Name Title Signature
Xxxxx X. Xxxxxxx Chief Executive
Officer __________________
Xxxxx Xxxx Executive Vice __________________
Pres., Chief Financial
Officer, Secretary and
Treasurer
X. Xxxxx Lining Senior Vice President __________________
and Controller
IN WITNESS WHEREOF, I have signed this Certificate and affixed to it
the Borrower's corporate seal on _________________, 1997.
__________________
Secretary
[Seal]
- 2 -
EXHIBIT 4
EMERGENT COMMERCIAL MORTGAGE, INC.
----
BOARD OF DIRECTORS' RESOLUTIONS
----
RESOLVED, that the officers of this Corporation be and they hereby are
jointly and severally authorized and directed to borrow from NationsBank, N.A.
("NATIONSBANK"), from time to time, on behalf of this Corporation, such sums as
they or any of them may deem necessary or desirable in connection with the
operation of the business of this Corporation, upon such terms and conditions as
shall be obtained through negotiation with NationsBank, and to execute one or
more or financing agreements and promissory notes in respect thereto in the name
of this Corporation for the payment of such amounts so borrowed, and further to
extend, renew, renegotiate, refinance, or otherwise modify such terms and
conditions by agreement with NationsBank.
FURTHER RESOLVED, that the officers of this Corporation be and they
hereby are jointly and severally authorized and directed to request, from time
to time, on behalf of this Corporation, as they deem necessary or desirable for
the operation of the business of this Corporation, that NationsBank make
advances and overadvances to this Corporation, such advances and overadvances to
become subject to the terms and conditions of any agreement with regard to the
loan financing of accounts receivable existing at the time of such request or
any modification, extension, renewal, or renegotiation thereof.
FURTHER RESOLVED, that the officers of this Corporation be and they
hereby are jointly and severally authorized and directed, from time to time, on
behalf of this Corporation, to secure any such loans, advances, overadvances, or
other indebtedness to NationsBank however arising, by pledging, or by granting
full lien rights and full security title and security interest in and to, any
and all of the assets of this Corporation, both real and personal, and such
officers are jointly and severally authorized to execute any and all instruments
necessary or desired by NationsBank in any manner as may now or hereafter be
recognized by the laws of the United States or any state, or of any foreign
state.
FURTHER RESOLVED, that any such officers of this Corporation be and are
hereby jointly and severally authorized and directed, on behalf of this
Corporation, to do such other things and to execute such other documents as may
be necessary or desirable to effect the foregoing transactions, including the
execution of financing statements and such other notices or instruments as may
be necessary or requested by NationsBank.
FURTHER RESOLVED, that all acts and deeds of any officer of this
Corporation heretofore performed on behalf of this Corporation in entering into,
executing, performing, carrying out, or otherwise pertaining to the arrangements
and intentions authorized by these resolutions be and they hereby are ratified,
approved, confirmed, and declared binding upon this Corporation.
FURTHER RESOLVED, that the Secretary of this Corporation shall certify
to NationsBank the names of the presently duly elected and qualified officers of
this Corporation and shall from time to time hereafter as each change in
identity of those officers is made, immediately certify such change to
NationsBank, and NationsBank shall be fully protected in relying on such
certification(s) (or the absence thereof), and shall be indemnified and saved
harmless by this Corporation from any claim, demand, expense, loss, or damage
resulting from or growing out of honoring the signature of any officer so
certified or for refusing to honor any signature not so certified.
FURTHER RESOLVED, that the foregoing resolutions shall remain in full
force and effect until the close of business on the banking day after written
notice of their amendment or rescission shall have been received by NationsBank
and that receipt of such notice shall not affect any action taken by NationsBank
prior thereto.
FURTHER RESOLVED, that the Secretary of this Corporation be, and hereby
is, authorized and directed to certify to NationsBank the foregoing resolutions
and that the provisions thereof are in accordance with the provisions of law and
of the articles of incorporation and by-laws of this Corporation.
-2-
EXHIBIT B
BORROWER'S CEO'S CERTIFICATE
FOR THE BENEFIT OF
NATIONSBANK, N.A.
I, Xxxxx X. Xxxxxxx, Chief Executive Officer of Emergent Commercial
Mortgage, Inc. (the "BORROWER"), a South Carolina corporation, do hereby
certify, pursuant to Section 4.1 of the Amended and Restated Loan and Security
Agreement (the "AGREEMENT") between NationsBank, N.A. (the "LENDER") and the
Borrower, dated as of __________________, 1997, that Xxxxx X. Xxxx has been duly
elected, has duly qualified, as of the date of the execution of the Agreement
was, and on the date hereof is, the Secretary of the Borrower, and that the
signature appearing below is a true specimen of his signature.
Xxxxx X. Xxxx, Secretary
__________________, 1997.
Xxxxx X. Xxxxxxx, Chief Executive Officer
EXHIBIT C
[To Be Retyped on Letterhead
of Counsel to the Borrower]
________________, 1997
NationsBank, N.A.
X.X. Xxx 0000
Xxxxxxx, Xxxxxxx 00000-0000
Re: Emergent Commercial Mortgage, Inc.
Ladies and Gentlemen:
We have acted as counsel to Emergent Commercial Mortgage, Inc. (the
"BORROWER"), a South Carolina corporation, in connection with its execution and
delivery of the _______________, 1997 Amended and Restated Loan and Security
Agreement (the "LOAN AGREEMENT") between it and you, and certain related
documents. Unless otherwise specified in this opinion letter, the terms used
herein have the same meanings as in the Loan Agreement.
We also have acted as counsel to Emergent Group, Inc. in connection
with its execution and delivery of the Guarantee.
In so acting, we have examined the Loan Agreement and the Guarantee,
and originals or copies of all other documents that we deemed relevant and
necessary as a basis for the opinions hereinafter set forth.
Based upon the foregoing, we are of the opinion that:
(1) The Borrower is a corporation duly organized and validly
existing in good standing under the laws of South Carolina, and has all
requisite power and authority to conduct its business, to own and operate its
properties, and to execute, deliver, and perform all of its obligations under
the Loan Agreement. The Borrower has no Subsidiary. The Borrower is duly
qualified, licensed, or domesticated and in good standing as a foreign
corporation duly authorized to do business in all jurisdictions in which the
character of its properties owned or the nature of its activities conducted
makes such qualification, licensing, or domestication necessary (as set forth in
Section 7.3 of the Loan Agreement).
(2) The Borrower's execution, delivery, and performance of the
Loan Agreement have been duly authorized by all necessary corporate action and
do not and will not (a) require any consent or approval of shareholders of the
Borrower or violate the articles of incorporation, by-laws, or Securities of the
Borrower, (b) violate any provision of any law, rule, or regulation (including
Regulation X of the Board of Governors of the Federal Reserve System) of the
United States or of South Carolina, or, to the best of our knowledge, any order,
judgment, injunction, decree, determination, or award of any court, arbitrator,
or governmental department, agency, or other instrumentality, (c) to the best of
our knowledge, result in a breach of or constitute a default under any agreement
or instrument to which the Borrower is a party or by which it or its properties
may be bound or affected, or (d) result in, or require, to the best of our
knowledge, the creation or imposition of any Lien upon or with respect to any of
the properties now owned or hereafter acquired by the Borrower (other than the
Liens created by the Loan Agreement). To the best of our knowledge, the Borrower
is not in violation of any provision of any of the items described in clause (b)
of this paragraph or in default under any provision of any of the items
described in clause (c) of this paragraph.
(3) No authorization, consent, approval, license, or exemption
of, or filing or registration with, any court or governmental department,
agency, or other instrumentality of the United States or of South Carolina is or
will be necessary to the Borrower's valid execution, delivery, or performance of
the Loan Agreement or for the payment to the Lender of all sums due and payable
thereunder.
(4) The Loan Agreement has been duly executed and delivered by
the Borrower, and constitute the Borrower's legal, valid, and binding
obligation, enforceable against the Borrower in accordance with its terms.
(5) To the best of our knowledge, there are no actions, suits,
or proceedings pending or threatened against or affecting the Borrower of the
Guarantor or the properties of the Borrower or the Guarantor before any court,
arbitrator, or governmental department, commission, board, bureau, agency, or
other instrumentality (state, federal, or foreign) which, if determined
adversely to the Borrower or the Guarantor, would have a materially adverse
effect on the financial condition, properties, or operations of the Borrower or
the Guarantor, or create a Lien on any property of the Borrower or the
Guarantor.
(6) You should perfect all the security interests granted
under the Loan Agreement (in Collateral for which a security interest can be
perfected by filing UCC-1 financing statements) by filing a UCC-1 financing
statement in the attached form with the South Carolina Secretary of State. Upon
the filing of such financing statement, you will have a perfected first-priority
security interest in such Collateral, and no further recording or filing in
South Carolina or any other jurisdiction is necessary or advisable in order to
establish and perfect such first-priority security interest.
-2-
(7) The Guarantee has been duly authorized, executed, and
delivered by the Guarantor, and constitutes the Guarantor's legal, valid, and
binding obligations, enforceable against the Guarantor in accordance with its
terms.
This opinion is limited to the laws of the United States and of South
Carolina. The opinions in paragraphs nos. 4 and 7 are given as if the laws of
South Carolina governed the Loan Agreement and the Guarantee, despite their
express choice of Georgia law as the law governing their construction and
interpretation. No opinion is given as to the validity of the choice of law in
the Loan Agreement and the Guarantee.
Our opinions set forth herein as to the validity, binding effect, and
enforceability of the Loan Agreement and the Guarantee are specifically
qualified to the extent that the validity, binding effect, or enforceability of
any obligations of the Borrower and the Guarantor thereunder or the availability
or enforceability of any of the remedies provided therein, may be subject to or
limited by (i) applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium, and other statutory or decisional laws, heretofore or
hereafter enacted or in effect, affecting the rights of creditors generally to
the extent the same may constitutionally be applied including, without
limitation, decisional or statutory law concerning recourse by creditors to
security in the absence of notice of a hearing; (ii) the exercise of judicial or
administrative discretion in accordance with general equitable principles; (iii)
the possible unenforceability of any provision requiring or in effect requiring
that waivers or amendments of any provision of the Loan Agreement or the
Guarantee, or any related document, may be effected only in writing; (iv) the
possible unenforceability of provisions imposing increased interest rates or
late payment charges upon delinquency in payment or default, to the extent that
any such provision is deemed a "penalty"; (v) limitations imposed by rules and
statutes regarding forum, venue, pleading, service of process, qualification to
do business, and statutes of limitation; or (vi) limitations on the availability
or enforceability of the remedies of specific performance or injunctive relief
and of waivers contained in the Loan Agreement or the Guarantee, all of which
may be limited by equitable principles or applicable laws, rules, regulations,
court decisions, and constitutional requirements.
All opinions rendered herein are limited to the existing laws of the
State of South Carolina and laws of the United States of America, all as in
effect on the date hereof, and we express no opinion as to any other laws,
rules, or regulations of such jurisdictions or matters governed by such laws,
rules, or regulations; nor do we undertake, by delivery hereof or otherwise, to
advise you of any changes in such laws, rules, or regulations.
-3-
This opinion is made as of the date hereof, and we undertake no (and
hereby disclaim any) obligation to advise you of any change in any matter set
forth herein. This opinion is limited to the matters expressly set forth herein
and no opinion is implied or may be inferred beyond the matters expressly stated
herein. This opinion is solely for your benefit in connection with the Loan
Agreement and the Guarantee and may not be relied upon in any manner by any
other person.
Very truly yours,
WYCHE, BURGESS, XXXXXXX &
XXXXXX, P.A.
By:
Xxxx X. Xxxx, Xx.
XXXXXXXX 0
Xxxxx
XXXX
SCHEDULE 2
Trademarks, Tradenames, Name Changes, etc.
NONE
SCHEDULE 3
Litigation
NONE
